TIME CHARTER TRIP: WHETHER THE PARTICULAR TERMS OF THE CHARTER PERMITTED CHARTERERS TO ORDER THE VESSEL TO LOAD A FURTHER CARGO AFTER THE INITIAL CARGO HAD BEEN DISCHARGED: ARBITRATION ACT 1996 SECTION 69 APPEAL

Summary

The particular terms of the one time charter trip agreed with Owners permitted Charterers prior to redelivery to order the vessel to load a further cargo after the last of the initial cargo loaded had been discharged.

SBT Star Bulk & Traders (Germany) (“Owners”) time chartered “Wehr Trave” to Cosmotrade SA (“Charterers”) on an amended NYPE 1946 form dated 16 October 2013 for “one time charter trip”, the material terms of which are set out at fn1 (“Charter”).

The vessel was delivered into the Charter on dropping last outward sea pilot at Algeciras on 16 October 2013, on which day Charterers gave voyage orders to Owners as follows:

The vessel proceeded from her place of delivery to the Black Sea, where she loaded cargoes at three ports – namely Sevastopol/Avitla, Novorossiysk and Constantza/Agigea. The vessel then proceeded on her route, discharging at one port in the Red Sea (Jeddah), one port in the Gulf of Oman (Sohar), and three ports in the Persian Gulf (Hamriyah, Jebel Ali and Dammam). The vessel berthed at Dammam on 7 December 2013.

On the following day, 8 December 2013, Charterers then ordered the vessel to proceed to Sohar (Oman) after sailing from Dammam on completion of discharge, to load a project cargo for delivery at New Mangalore or Cochin (West Coast of India).

The last order led to the dispute, where Owners’ case was that Charterers were not contractually entitled to make such an order, i.e. was an illegitimate order. However, the arbitral tribunal concluded that Charterers were so entitled, and Owners obtained leave to appeal to the High Court to challenge that decision.

Judgment

Having heard counsel for both parties, the judge highlighted the importance of keeping in focus the fact that the charter agreed was a time charter. The judge identified two main categories of time charter: term time charters (where the charter period is agreed in advance) and trip time charters (where the charter period is defined by a trip within a geographical range), citing The “Wisdom C” (fn2) and The “Eugenia” (fn3).

The judge did not agree with Owners that the arbitral tribunal had taken their “eye off the ball”, as to both the nature of the trip agreed and the ranges, by being too astute to emphasis the distinction between a time charter and a voyage charter. The judge pointed out that from a charterers’ perspective one of the advantages which a time charter (including a trip time charter) has over a voyage charter is that voyage orders under a time charter do not constitute an irrevocable election, citing The “Aragon” (fn4).

While the judge acknowledged that it is also important to recognise that the concept of a “trip time charter” embraces (or at least may embrace) a number of possible permutations, the scope of any “trip time charter” will, ultimately, depend upon the particular terms agreed between the parties, such that any such restriction would have to be specifically agreed and, in the judge’s view, would require clear words.

With this in mind, the judge considered it to be plain that “charterers were not (as a matter of language) restricted to loading the vessel at a single port. The charter in the present case specified a delivery port/range and a redelivery port/range. By and within that range, it specified a route. On that route the vessel was to trade ‘between good safe port and/or good safe ports and good safe berth and/or good safe berths and good safe anchorage and/or good safe anchorages, always afloat, always within Institute Warranty Limits (See also Clause 38 [the Trade Exclusion Clause]) as the Charterers or their Agents shall direct’ (ll. 18-35).”

The judge continued: “Thus, I agree that the charterers were, in principle, entitled to call at such ports as they wished provided that the calls were within the trading limits (ll. 18-35 and cl. 38) and the route was not inconsistent with the contractual route, which was a voyage from Algeciras to the Colombo/Busan range via the East Mediterranean and/or the Black Sea and/or the Red Sea and/or the Persian Gulf and/or India and/or the Far East (always via the Gulf of Aden and always ending in the Colombo/Busan range).”

Accordingly, the judge affirmed that the arbitral tribunal was correct to hold that Charterers were entitled to give orders to load a further cargo at Sohar.

Comment

The judgment highlights that a trip time charter (where the charter period is defined by a trip within a geographical range), while being likened to a hybrid of a term time charter (where the charter period is agreed in advance) and a voyage charter (where the charter is to carry goods from and to specific or nominated ports), does possess the key feature of a time charter, as the charterer is entitled lawfully to direct and order the vessel to be employed as it chooses within the scope of the geographical range agreed. Accordingly, if an owner wishes to restrict the scope of the directions and orders that the charterer may give, clear express words are required to achieve the desired effect.

Footnote 1:

Lines 13-15: …“That the said Owners agree to let, and the said Charterers agree to hire the said vessel, from the time of delivery, for one Time Charter trip via good and safe always afloat, always accessible port(s) and/or berths via Continent/Mediterranean/Black Sea/East Mediterranean to Red Sea/Persian Gulf/India, always via Gulf of Aden one Time Charter trip via via good and safe ports and/or berths via East Mediterranean/Black Sea to Red Sea/Persian Gulf/India/Far East always via Gulf of Aden, with steels and/or other lawful/harmless general cargo, suitable for carriage in a cellular container vessel as described. No bulk cargo is allowed. Duration about 40-45 days without guarantee minimum 40 days without guarantee within below mentioned trading limits.”

Lines 18-35: “Vessel to be placed at the disposal of the Charterers on passing Skaw, Denmark dropping outward pilot Algeciras at any time day or night, Saturdays, Sundays and Holidays included. Vessel on her delivery to be ready to receive any permissible cargo… in such lawful trades, between good safe port and/or good safe ports and good safe berth and/or good safe berths and good safe anchorage and/or good safe anchorages, always afloat, always within Institute Warranty Limits (See also Clause 38) as the Charterers or their Agents shall direct …”

Clause 4: “That the Charterers shall pay for the use and hire of the said Vessel at the rate of U.S.$10,000.00- 8,200 per day, pro rata including overtime, basis redelivery Mumbai/Colombo range or U.S.$9,250.00- per day, pro rata including overtime basis redelivery East Coast India, payable every 15 days in advance, commencing on and from the day/time of her delivery, as aforesaid, and at and after the same rate for any part of a day; hire to continue until the time of the day of her re-delivery as per Clause 55 in like good order and condition, ordinary wear and tear excepted, to the Owners (unless lost) on dropping last outward sea pilot one (1) safe port in Charterers' option Mumbai/Colombo range or in Charterers' option one (1) safe port East Coast India range, not north but including Chennai Colombo/Busan range including China not north Qingdao, at any time day or night, Saturdays, Sundays and Holidays included…’”

Footnote 2: [2014] EWHC 1884 (Comm), [2015] 1 WLR 1.

Footnote 3: [1963] 2 Lloyd’s Rep 381.

Footnote 4: [1975] 1 Lloyd’s Rep 628, at p633 lhc, in which Donaldson J stated that it was “wholly foreign to the whole conception of a time charter-party, which entitle[s] the charterer upon paying the hire to call upon the vessel to visit any port or ports which he wishe[s] within trading limits subject to any express agreement to the contrary”.